Dow Jones Industrial Average Drops 163 Points In the Midst Of Mixed FOMC Minutes

U.S. stocks closed sharply lower Wednesday after minutes from the latest Federal Reserve meeting showed policy makers were concerned over muted inflation, a sign that the central bank may not raise interest rates at its mid-September meeting. Eight of the 10 Standard & Poor's 500 sectors traded lower, led by a 2.6 percent decline in energy stocks, after oil prices tumbled to six-year lows following an unexpected rise in crude stockpiles.

The Dow Jones Industrial Average (INDEXDJX:.DJI) tumbled 162.61 points, or 0.93 percent, to close at 17,348.73. The S&P 500 index (INDEXSP:.INX) lost 17.31 points, or 0.83 percent, to end at 2,079.61. And the Nasdaq composite (INDEXNASDAQ:.IXIC) dropped 40.29 points, or 0.80 percent, to finish at 5,019.05.

The latest minutes from the U.S. central bank’s July 28-29 meeting indicated conditions for the first rates increase in about a decade had not been met, due primarily to muted inflation that has not yet moved toward the Fed’s 2 percent target.

"Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point. Participants observed that the labor market had improved notably since early this year, but many saw scope for some further improvement," the minutes said.

Dow components Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) led the index lower, shedding 3 percent and 2 percent, respectively.

Energy stocks fell under pressure after oil prices tumbled in six-year lows following an unexpected rise in crude stockpiles. West Texas Intermediate crude, the benchmark for U.S. oil prices, dropped nearly 4.3 percent to $40.80 per barrel for September delivery on the New York Mercantile Exchange. On the London ICE Futures Exchange, Brent crude, the global benchmark for oil prices, fell 13.79 percent to $46.92.

Meanwhile, McDonald's Corporation (NYSE:MCD) and Nike Inc. (NYSE:NKE) were the only stocks in the Dow to close higher, up 0.3 percent and 0.12 percent, respectively.

The yield on the benchmark 10-year Treasury note sank 2.12 percent Wednesday in response to the Federal Reserve’s minutes. The decline in yields helped push interest rate-sensitive sectors higher, as utilities and telecommunications were the only two sectors in the S&P 500 to close higher.

The decline in yields is also telling because it signals investors anticipate the Federal Reserve may wait until after September to lift rates.